Dangote Refinery to Send First Shipment of Low-Sulfur Fuel Oil to Singapore

In a significant milestone for Nigeria’s burgeoning energy sector, Dangote Refinery is poised to dispatch its first shipment of low-sulfur straight-run fuel oil (LSSR) to Singapore this week. According to ship tracking data and market sources, this shipment marks Dangote Refinery’s inaugural foray into the Asian market.

This move establishes a new trade route from the recently inaugurated refinery to Asia, a region that consistently experiences a shortage of low-sulfur fuel oil essential for refueling ships at Singapore, the world’s largest bunker hub.

Dangote Refinery, which commenced operations in January following a monumental $20 billion investment, boasts the capacity to process up to 650,000 barrels of oil per day. Once it reaches full operational capacity, it will be the largest refinery in Africa and Europe.

Since March, Dangote Refinery has ramped up its LSSR exports, predominantly directing shipments to the Americas and Europe, as evidenced by ship tracking data from Kpler and Vortexa. However, the refinery is now extending its reach to Asia, with the first shipment set to arrive on Wednesday.

The Glencore-chartered vessel, Front Brage, is scheduled to deliver approximately 124,000 metric tons (787,400 barrels) of LSSR to Singapore. Market sources indicate that this cargo was redirected to Asia due to weaker demand in Europe. Data from LSEG highlights that the east-west spread for front-month 0.5 percent low-sulfur fuel oil (LSFO), representing the price differential between these regions, remained above $40 per ton this week.

Dangote’s LSSR cargoes are typically priced against Rotterdam’s 0.5 percent LSFO quotes on a free-on-board basis, although the specific pricing differential for this shipment was not disclosed by market sources.

Another LSSR shipment from Dangote Refinery, carrying around 157,000 tons, is expected to arrive in Singapore in July aboard the vessel Stena Suede, according to ship tracking data.

LSSR is generally blended with other fuels to produce LSFO for bunkering or used as feedstock in various refinery processes. This strategic export underscores Dangote Refinery’s expanding influence and capability in the global oil market.

In February, Dangote began exporting oil products and started purchasing crude oil, primarily from the Nigerian National Petroleum Company (NNPC) Ltd, in December 2023. This development is a testament to Dangote Refinery’s growing role in not only meeting domestic fuel needs but also in influencing international oil markets through strategic exports.

The establishment of this new trade route to Asia signals a promising diversification of markets for Dangote Refinery, potentially enhancing Nigeria’s economic landscape and strengthening its position in the global energy market.

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